India procures 70% of its defence equipment internationally, from the government, under the Defence Production Policy. It aims to encourage local manufacturing of military aircraft, warships, ammunition and armoured vehicles. This is the third move in recent months to promote startups in the defence sector.
The ministry of Defence has specified new rules for Indian startups enabling them to take part in military projects. The new rules specified are in an effort to focus the attention of these startups on cutting edge research and development. The new rules have been specified this week and seek to encourage new firms to undertake research projects. The ministry aims to develop or advance the weapon systems and work to reduce imports.
The new rules state that the startups in certain categories will be qualified automatically to take part in specific defence projects. The projects will be recognised by the Department of Industrial Policy & Promotion (DIPP). These categories include virtual reality (VR), aeronautics, renewable technology, robotics, nanotechnology, green technology, and the Internet of Things (IoT). The government has also simplified certain rules for rather smaller research and development projects by keeping opportunities open for all Indian companies, dropping any rules of participation. These new rules state that for projects with projected cost of prototype models which is equal to or less than $436.27K, no separate technical or financial criteria will be defined for both startups and other businesses. This will encourage their participation. However, there will not be any funding from the government for developing the prototype. Though, there will be an assurance of orders on successful development and trials. The projects will be shortlisted under specified categories by the three forces–Army, Air Force and Navy. Currently, the forces have already identified 53 projects that can be prioritized under the rules.
According to reports, the defence industry is expected to be worth over $700 Billion by 2026. The government can try and cut down billions of dollar imports of the defence equipment with the help of Indian startups with Make in India also picking up the pace.